Xavi scored 85 goals in 767 appearances for Barcelona between 1998 and 2015
Barcelona coach Xavi will remain at the club until at least the end of his contract in June 2025 after changing his mind that this would be his last season.
The 44-year-old announced in January he would step down as boss this summer.
But, with president Joan Laporta keen for him to remain, the former Barcelona and Spain midfielder has performed a U-turn.
Laporta said: "We know that he made some statements in the middle of the season, but today we have the good news that he is staying and he has conveyed to me the enthusiasm and confidence he has in the project."
Xavi took charge in November 2021 after leaving Qatari club Al Sadd and guided Barca to the Spanish title in his first full season in charge in 2022-23.
However, they are 11 points behind La Liga leaders Real Madrid with six games left to play in the current campaign.
Barcelona exited the Champions League last week following a quarter-final defeat by Paris St-Germain.
Xavi, who won 25 honours during an illustrious playing career at Barcelona, had said he felt "liberated" following the announcement that he would step down from the role at the end of the season.
When he announced he was leaving after defeat by Villarreal, he felt he was not being protected by the club and there was no clear direction.
But since that moment, when Xavi felt able to take a more relaxed approach, the team's results improved.
They went 10 games unbeaten in the league before losing 3-2 at Real Madrid on Sunday.
A meeting took place in Laporta’s house on Wednesday and the pressure from the club for him to stay was obvious.
If Xavi is unable to improve the team by the end of the 2024-25 season, Barcelona will look to persuade one of the high-profile managers out of contract then – including Pep Guardiola, Luis Enrique and Mikel Arteta.
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